Market Watch

Alan Brugler is the President of Brugler Marketing & Management, and the primary analyst and advisor.

Up!

Feb 12, 2010

Market Watch with Alan Brugler

February 12, 2010

Up!

All of the commodities tracked in our ag table below were higher this week than they were on the previous Friday. That in itself is quite an accomplishment, reminiscent of 2008 in terms of uniform direction if not in the size of the moves!

March cotton was the clear winner for bull market of the week. Cotton got a major assist from USDA on Tuesday morning, when USDA increased it’s expected exports for the year by another million bales and dropped projected 2009/10 ending stocks to 3.3 million bales. The move was exaggerated by the steep price drop in the weeks ahead of the report.

Soybeans had a solid advance of 3.45% for the week, neatly supported by corresponding gains of 3.32% in the meal and 2.27% in the soybean oil. It’s easier to have soybeans rally when the value of the products created from the beans is also going up. USDA helped support the rally by dropping projected US ending stocks to 210 million bushels. Old crop use continues to be very aggressive by both crushers and exporters. Harvest is progressing ahead of schedule in Brazil, but much of the crop there is not yet mature. USDA did raise the projected production by 1 MMT. Argentine production was left at 53 MMT.

Wheat futures were higher at all three exchanges. Chicago continued to gain on Kansas City. While the board spread still shows a premium to KC that may not be the case in some cash markets. Hard red wheat is deliverable against Chicago futures should values drop enough vs. Chicago to make it feasible to do so. That is more likely to happen after the variable storage rates go into effect. USDA made only a 5 million bushel adjustment to the ending stocks on Tuesday, bumping them up to 981 million bushels.

Corn futures closed 10 cents higher for the week. Tighter ending stocks were part of the reason, with USDA cutting projected old crop stocks to 1.719 billion bushels from 1.764 billion in the January report. Stronger ethanol consumption of corn is seen for the year, although gasoline demand is seasonally low in February and discretionary blending has been minimal. Livestock use is still a question mark, with broiler chick placements running below year ago for at least the last four weeks.

Below is a table showing the net weekly changes and 4 week history of selected agricultural futures:

Market Watch

Weekly

Weekly

01/22/10

01/29/10

02/05/10

02/12/10

Change

% Change

March Corn

$3.65

$3.57

$3.52

$3.62

0.10

2.84%

March CBOT Wheat

$4.99

$4.74

$4.73

$4.87

0.13

2.80%

March KCBT Wheat

$5.02

$4.87

$4.85

$4.95

0.10

2.06%

March MGEX Wheat

$5.13

$5.01

$5.03

$5.05

0.02

0.40%

March Soybeans

$9.52

$9.14

$9.14

$9.45

0.32

3.45%

March Soybean Meal

$286.40

$273.80

$271.00

$280.00

9.00

3.32%

March Soybean Oil

$36.71

$36.15

$37.00

$37.84

0.84

2.27%

February Live Cattle

$86.62

$85.80

$87.25

$89.37

2.12

2.43%

March Feeder Cattle

$99.60

$98.88

$98.33

$99.92

1.60

1.62%

February Lean Hogs

$69.85

$66.50

$66.70

$67.45

0.75

1.12%

March Cotton

$71.07

$69.03

$66.62

$74.39

7.77

11.66%

March Oats

$2.33

$2.28

$2.26

$2.37

0.11

4.64%

March Rice

$14.17

$14.20

$14.09

$14.26

0.17

1.24%

Hogs saw the February contract expiring on Friday, up 75 cents from the previous week. The pork cutout was down 26 cents on Friday to $68.05 and off $1.07 from the previous week. That was a 1.5% drop, but cash hogs were able to fight against it because packers needed the numbers. Technically, prices bounced from support the prior week, and ran into moving average resistance on Thursday and Friday that slowed the price advance.

Cattle futures also advanced this week, up $2.12 per hundred to $89.37. That 2.43% gain was fueled by lighter carcass weights and their supportive effect on wholesale prices. Feedlots continue to struggle with feed efficiency and rates of gain in trying weather conditions. A wide swath of feedlot country is still under snow cover, and that will likely be followed by mud after the weather warms up. Some cash cattle trade was recorded at $89 in the south on Friday. It had been preceded by $140 trade in the north on Thursday and a few deals at $141 on Friday.

Market Watch: The US commodity markets are closed on Monday for the President’s Day holiday. Chinese markets are also closed for the Chinese New Year’s. NOPA soybean crush for January is expected to be released on Tuesday morning, Feb 16. USDA weekly export inspections are also scheduled for that date as long as staffers have had enough work days to compile the data. Federal offices were closed several days this past week due to heavy snowfall along the East Coast. USDA’s Cattle on Feed report is scheduled for Friday the 19th, along with weekly Export Sales and monthly Milk Production. Friday will also be the expiration day for March grain options.

There is a risk of loss in futures and options trading. Past performance is not necessarily indicative of future results. Comments made in this article are in no way to be seen as an endorsement of futures and options trading, or of any particular risk management technique. Reproduction or rebroadcast of any portion of this article without written consent of Brugler Marketing & Management LLC is strictly prohibited. Call 402-697-3623 for information on our more extensive paid subscription and consulting services.

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Anonymous2/17/2010 06:40 PM

down

Anonymous2/13/2010 01:27 PM

We use a lot of corn domestically and internationally for ethanol. Just curious what the latest bushel amount for wheat being used internationally for ethanol is? I think we need another usage number started here? Or do we have one already?